Tesla Motors Inc Lucrative Ahead, Current Performance Unimpressive

Tesla Motors is exhibiting strong potential in the future, but its recent performance has not been outstanding since its lackluster quarterly earnings report. Recently in their report, Argus Research Company analysts assigned a Hold rating to the stock, saying the stock price is appropriate considering the current and forward year P/E multiples.

Oil prices, China concerns for Tesla

The fact that the EV manufacturer could not garner as many sales as expected and remaining uncertain on the back of the oil crisis have built downward pressure on the company’s share price. Argus noted that Tesla will find it challenging to convince customers to buy their cars because of lower fuel costs.

Sales have also not been going very well in China, which Tesla expected to be the next big market after the United States. Also it is not just sales that have struggled, but also the company’s internal operations were not impressive, and its production schedule failed to meet the deadline.

Separately, Analyst Andrew Fung of CLSA Americans has rated the stock at Underperform, it from an Outperform rating and lowering his price target to $220 from $275. Fung is cautious about the stories developing around the Model X since Tesla announced the vehicle.

Fung told CNBC, “There are other complexities in the new design so initial margins may not be as strong as what investors are anticipating.”

The Model X will be the first sports utility vehicle from the house of Tesla, and CEO Elon Musk has promised the car will have a seating capacity of seven adults with improved all-wheel drive and falcon wing doors.

Positives to look forward to

However, there are enough positives in the company to look for, which could push the shares up, added Argus analysts. Recently, the Palo Alto-based company announced its plans to escalate the number of supercharging units by over 50%. Additionally, the company is planning to manufacture 55,000 units of the Model S, and the upcoming Model X vehicle will further help its cause.

Also the gigafactory, one of the most ambitious projects of Tesla Motors, will bring a fresh air of change with its completion by bringing down battery costs and thereby enabling the automaker to bring lower-cost vehicles in the market.